Official Opinion 95-25

Regents may lease its lands in return for the endowment of a research chair if the endowment is equal to the fair market value of the lease and the term of the lease is reasonable.

The Vice Chancellor for Facilities has requested a succinct explanation of the gratuities clause and in addition has asked whether Regents may lease its lands in return for the endowment of a research chair in a particular field.

The Gratuities Clause

The 1983 Georgia Constitution prohibits the General Assembly from granting any donation or gratuity and forgiving any debt. Ga. Const. 1983, Art. III, Sec. VI, Para. VI. The gratuities clause extends to departments of the state, specifically prohibiting them from granting any donation or gratuity in favor of any person, corporation, or association. 1957 Op. Att'y Gen. p. 246. In the real property context, this provision prohibits the state, including Regents, from conveying property, regardless of the form of the conveyance, for less than fair market value. 1971 Op. Att'y Gen. U71-17. There is no "gratuity" if a public grantor accepts in-kind consideration of equivalent value in lieu of money. In-kind consideration may take the form of a promise by the grantee to assist the grantor in performing its governmental mission. Smith v. Board of Commissioners, 244 Ga. 133 (1979). However, the acceptance of in-kind consideration has limitations partially discussed below.

Lease in Return for Endowment

You have asked whether Regents may lease its lands in exchange for the endowment of a research chair in a particular field.

The Board is empowered by the Constitution to "accept . . . donations, grants, . . . and other property for the use of the University System of Georgia." Ga. Const. 1983, Art. VIII, Sec. IV, Para. I(e). The Constitution also empowers the Board to "lease, . . . or otherwise dispose of public property . . . and utilize the proceeds arising therefrom." Ga. Const. 1983, Art. VIII, Sec. IV, Para. I(d).

In addition, the Georgia Code gives Regents very broad general powers to decide what is necessary for the usefulness of the institutions of the University System of Georgia, limited only by the restraints of law which are directly expressed or necessarily implied. O.C.G.A. § 20-3-31; see Villyard v. Regents of Univ. Sys. of Ga., 204 Ga. 517 (1948); State v. Regents of the Univ. Sys. of Ga., 179 Ga. 210 (1934) (Regents may exercise any power usually granted to corporations of like character). Based on these constitutional and statutory provisions, Regents may accept the funding of an endowment in exchange for a lease.

Furthermore, Regents has the power to act as a trustee to hold endowment funds in trust for the benefit of a particular institution of the University System. O.C.G.A. § 20-3-57; § 20-3-82 (Georgia Eminent Scholars Endowment Trust Fund); Villyard v. Regents of Univ. Sys. of Ga., 204 Ga. 517 (1948). The actual terms of the trust and whether or not it is set up under the Georgia Eminent Scholars Endowment Trust Fund may be left to the determination of the parties. However, the ability of the Board to accept specific terms of a proposed endowment may be limited by the rule prohibiting the present Board from binding the educational discretion of its successors beyond a reasonable transition. State Ports Auth. v. Arnall, 201 Ga. 713, (1947); Aven v. Steiner Cancer Hosp., Inc., 189 Ga. 126, 128 (1939); 1995 Op. Att'y Gen. 95-9.

In summary, it is my official opinion that Regents may lease its lands in return for the endowment of a research chair if the endowment is equal to the fair market value of the lease and the term of the lease is reasonable.